Essential Steps in a New Finance Director Role webinar

Transcription

1 Essential Steps in a New Finance Director Role webinar 2:00 3:30 p.m. Pacific Time, Wednesday, January 11, 2017 CSMFO Coaching Program Whether it's your first time as a Finance Director or you have become Finance Director for a new agency, you need to take action quickly to be sure that everything is in order. Learn what you need to cover in order to have a strong start. Advance registration required for this no-charge webinar: Webinar topics: 1. What are the essential steps to take when you enter a new finance director role? 2. How do you get to bedrock to create a solid foundation for moving forward? 3. What are some critical items to ensure the security of your agency's finances (and your career)? Presenters: * Scott Catlett, Finance Director and Treasurer, Yorba Linda, CA * Grace Leung, Assistant City Manager, Irvine, CA * Brent Mason, Finance Director, San Bernardino, CA Audience: local government finance professionals Get connected with these steps. 1. Register in advance for the webinar: There is no charge for participating in the webinars, but each requires advance registration. *** Advance registration required for this no-charge webinar: Be sure to "white list" or "allow" s from customercare@gotowebinar.com to receive notices for this webinar. 2. Connect with the webinar and audio: Use your logon information from the confirmation you receive via from GoToWebinar. We recommend the telephone option dial-in number provided by GoToWebinar for sound quality. Depending upon your internet connection, VOIP option for audio (computer speakers) can have delays or sound quality issues. 3. Ask questions:

2 You may submit questions anonymously via to in advance or via the webinar during the panel discussion. As moderator for the session, Don Maruska will pose the questions. 4. Presenters presentation materials: We post these with the agenda at Agendas & Archives tab of The PPT will be available 24 hours before the webinar. After a webinar occurs, a digital recording along with the PowerPoint materials and results of the polling questions will be available after 24 hours at the "Agendas & Archives" tab of CPE Credits: If you are a member of CSMFO and wish to obtain CPE credit, you need to register and attend in your name, respond to at least 75% of the live polling questions, and pay $25 to CSMFO after notice from CSMFO following the webinar. After payment, CSMFO s the CPE certificate as a PDF. Post-Webinar Group Discussions Many agencies are organizing groups to participate in the webinars (live or recorded) and discuss the topics among themselves after the webinars. Some are summarizing their discussions and distributing them to managers throughout their organizations. Use the CSMFO Coaching Program as an effective way to enhance professional development in your agency. Here are some discussion starters for this session: Post-webinar discussion questions: a. Do we know how our cash and other valuables are handled (approvals, etc.)? b. Are the critical fiscal policies in place and are they followed? c. What do we need to do to be sure that our agency is on a solid foundation? MORE RESOURCES--See the "Coaching Corner" at for valuable resources to boost your career. These include a Financial Management Skills Inventory, Resource Matrix, Coaches Gallery of 24 volunteer CSMFO Coaches willing to help you on a one-to-one basis, and an archive of digital recordings and materials from past webinars at Enjoy the resources to help you succeed in local government finance. Don Maruska, MBA, JD, Master Certified Coach Director, CSMFO Coaching Program; CSMFO@donmaruska.com Author How Great Decisions Get Made and Take Charge of Your Talent

3 Scott Catlett, Finance Director, Yorba Linda, CA Scott Catlett is the Finance Director and City Treasurer for the City of Yorba Linda, California, a city of approximately 70,000 residents located in Orange County. Prior to joining the staff in Yorba Linda, he was a Principal Budget Analyst, Budget & Debt Manager, and most recently Assistant Finance Director for the City of Riverside, California, a city of approximately 320,000 residents with a $1 billion annual budget. Earlier in his career, he worked for several firms providing financial consulting services to state governments, municipalities, and large commercial airports. Scott has a Bachelor of Science degree in Finance from Tulane University and a Masters of Public Administration degree from California State University, San Bernardino. He is a member of the Government Finance Officers Association (GFOA), the California Society of Municipal Finance Officers (CSMFO), and the California Municipal Treasurers Association (CMTA). He is currently serving a fourth year as Chair of the CSMFO Career Development Committee and is a past Chair of the Professional Standards and Recognition Committee and of the Inland Empire Chapter. Scott is also a member of the adjunct faculty at California State University, San Bernardino, where he teaches graduate courses in public sector financial management and government budgeting. Grace Leung, Assistant City Manager, Irvine, CA Grace Leung became Assistant City Manager in September, In this role, she provides operational leadership to the Directors of Administrative Services, Community Services, Community Development, Human Resources, IT, and Public Works. Grace had led the Administrative Services department since January. She has more than 20 years of finance, management and strategic planning experience in municipal government, including budget, accounting, purchasing, treasury, utility business management and internal audit. Grace holds a Bachelor's degree from Columbia University in Urban Studies and a Master's degree in Public Policy from the Kennedy School of Government at Harvard University.

4 Prior to coming to Irvine, Grace served for six years as Director of Finance for the City of Sunnyvale. Her responsibilities there included directing the development of Sunnyvale's performance-based budget and 20-year financial plan. Brent Mason, Finance Director, San Bernardino, CA Brent graduated from Biola University with a Bachelor s degree in Accounting. He spent four years in public accounting, primarily with Price Waterhouse Coopers. He then accepted a position with the City of Rialto as the Assistant Finance Director and was responsible for the daily operation of the Finance Department for three years. Following Rialto, Brent joined the City of Riverside and was there for 22 years. Hired originally as the Controller, a position he held for nine years, he was promoted twice first to Assistant Finance Director (position held for seven years) then to Finance Director/Treasurer in In that last role, Brent managed the City s entire financial operations which included accounting, budgeting, bond financing/debt management, purchasing, risk management and the investment/treasury function. In 2016, Brent transitioned to the City of San Bernardino as the Director of Finance and has been there about 9 months. He manages all the same duties, but has the additional responsibility of managing the fiscal affairs as the City moves out of bankruptcy. Brent has been married for 27 years and is the father of 11 children, 7 of which have been adopted. He and his wife advocate for adoption - particularly children with special needs.

5 Essential Steps for a New Finance Director Coaching Program January 11, 2017

6 Coaching Program: 19 th year as member benefit Career Development Committee 2

7 Overview of Session Topics: 1. What are the essential steps to take when you enter a new finance director role? 2. How do you get to bedrock to create a solid foundation for moving forward? 3. What are some critical items to ensure the security of your agency's finances (and your career)? Presenters: Grace Leung, Asst. City Manager, Irvine, CA Scott Catlett, Finance Director and Treasurer, Yorba Linda, CA Brent Mason, Finance Director, San Bernardino, CA Moderator: * Don Maruska, Director, CSMFO Coaching Program 3

8 Polling Question #1 Where are you in your career? 4

9 Essential Steps for a New Finance Director Connecting with your Finance Team, Executive Leadership, and Elected Officials CSMFO Webinar January 11, 2017 Grace K. Leung Assistant City Manager City of Irvine

10 The New Finance Director In a new director position, important to understand the different relationships you have with the department and with the organization As a director in a new organization, developing relationships are critical to your success Play to your strengths, trust your instincts, and don t be afraid to ask for help

11 The Finance Director Role Chief Financial Officer Mentor and Role Model Advisor and Confidant

12 Key Relationships Your Finance Team It s Lonely at the Top! Executive Leadership The Consigliere Elected Officials Just the Facts, Ma am

13 Your Finance Team It s Lonely at the Top! You now hold the top position in your department Your words and actions will be scrutinized Can be more challenging if you have been promoted from within May need to re-establish relationships with co-workers

14 Your Finance Team Assess your management team and critical positions Read performance evaluations Did anyone in the department or the agency apply for your job? Talk with your predecessor Evaluate where your vulnerabilities are Single point of failure Internal controls It s Lonely at the Top!

15 Your Finance Team Establish communication channels Be cognizant of positions and hierarchy Understand the departmental culture It s Lonely at the Top! Role of the department within the organization Relationships between divisions Aligned with your management/leadership model?

16 Your Finance Team It s Lonely at the Top! Set Performance Expectations Opportunity to recalibrate standards take advantage You are the connection to the rest of the organization Provide perspective and context for staff Reach out to your peers Connect with neighboring finance directors Connect with other directors in your agency

17 Executive Leadership Consigliere: Counselor, Advisor The Consigliere Currently it is most commonly used to designate advisers to the Mafia It is also often used generally of a political or financial adviser, or any other trusted adviser for that matter. Merriam-Webster

18 Executive Leadership The Consigliere Balancing your dual goals of fiduciary responsibility and customer service Integrating your departmental and citywide interests Building relationships of mutual trust and respect while asking the tough questions

19 Executive Leadership Working with your City Manager Understand your City Manager s background Financial perspective Understand your City Manager s management style Big picture v. detailed Tight v. loose control over departments Presenting financial information Understand your City Manager s drivers City Council or Board

20 Executive Leadership Get to know the departments operations Take tours, visit offsite locations Provide a citywide perspective for directors Because finance touches all operations, you are in a place to see connections, impacts Become a resource for problem solving Don t just say no, offer solutions Supporting your departments

21 The Elected Officials Just the facts, ma am

22 The Elected Officials Provide the facts, not your position or opinions CFO presenting verified financial data for informed decision making Take care to present all relevant information Just the facts, ma am Determine communication process with your City Manager Know your audience

23 The Elected Officials You don t know everything! If you don t know, don t guess The fastest way to lose credibility Have key facts and statistics at your fingertips Operating, CIP, and Total Budget Top revenues Pension Liability Just the facts, ma am

24 The Finance Director Role Elected Officials Executive Leadership Finance Team

25 Essential Steps for a New Finance Director Grace K. Leung gleung@cityofirvine.org

26 Polling Question #2 How many persons are participating at your location? 22

27 Essential Steps in a New Finance Director Role Focusing on Key Policies and Functions to Identify Risks and Opportunities Scott Catlett Finance Director / City Treasurer City of Yorba Linda Brent Mason Director of Finance City of San Bernardino January 11,

28 Focus of This Presentation The Career Development Committee has selected eight critical topics Sound externally-visible policies and practices Effective internal operational practices Many other important areas exist Some are listed at the end of the presentation We invite your feedback on other areas that you would like to see included in future webinars 24

29 Approach to Attacking These Issues First week(s) - Learning Assess what is already in place Read the budget, CAFR, and policy manuals Obtain copies of Council or Board reports regarding key issues Become familiar with agency-specific terms and nuances First month(s) - Observing Assess the organizational culture Find out if things are being done correctly Identify areas for improvement Identify missing policies or procedures Identify internal controls weaknesses First year(s) Implementing Prioritized Changes Make a list and prioritize Get buy-in from the chief executive and Council / Board as needed Implement change and ensure compliance 25

30 Focusing on Key Financial Policies and Externally-Visible Issues A new Finance Director will be judged primarily on what is seen by the Chief Executive and the Council or Board Internal policies and operations are equally important Evaluate the adequacy of current policies and practices Key areas to examine Interim budget reporting and multi-year forecasting Other budget-related issues Debt management policies and practices Investment policy and investment strategy 26

31 CA Municipal Financial Health Diagnostic Consider using the Diagnostic as a starting point Can be found on Michael Coleman s website at There is also a webinar in the CSMFO archives on this topic Will help you evaluate your agency in a number of key areas Deficits, reserves, budget tricks Capital asset condition Liquidity Unfunded liabilities Adequacy and timeliness of financial reports Existence of key financial management policies 27

32 Issue: Many agencies do not accurately analyze revenue and expenditures throughout the year or maintain a multi-year financial forecast/plan Potential problems: Interim Budget Reporting and Multi-Year Forecasting Unanticipated budget deficits or surpluses Failure to adequately plan for upcoming cost increases Lack of recognition of unfunded liabilities and needs Lack of understanding on the part of chief executive or Council / Board as to the fiscal impacts of decisions 28

33 Interim Budget Reporting Questions to ask: Is year-to-date information for all material funds analyzed more than once per year? Are prior year encumbrances, carryovers, mid-year appropriations, and unanticipated revenues adequately considered in the analysis? Is the report format clear and concise? Is the good, and more importantly the bad, information reported uniformly to the Council or Board? Is budget reporting currently emphasized as being important to staff and the Council or Board? 29

34 Questions to ask: Multi-Year Forecasting Is there an existing forecast with sufficient detail? Are the key assumptions valid and are independent thirdparty and internal experts involved? Are unfunded liabilities (pension, OPEB, etc.) addressed? Are unfunded needs (roads, facilities, etc.) addressed? Is the information provided to the Council or Board regularly and are they aware of what is and is not included? Is the information utilized in making decisions during budget discussions and throughout the year? 30

35 Other Budget-Related Issues Issue: There may be gaps or deficiencies in other important budget policies and practices Potential problems: Recurring reserve usage or reliance on one-time revenue Fund subsidies, inadequate cost allocation, or unsustainable internal borrowing Staff report-related concerns Lack of a budget reserves policy (or one that is not followed) 31

36 Other Budget-Related Issues Questions to ask: Is the budget truly balanced for key funds? Does the cost allocation plan allocate to all eligible and appropriate funds? Are there other functions / services that could be included in the cost allocation plan? Are internal borrowings appropriate / authorized and is repayment possible? 32

37 Other Budget-Related Issues Questions to ask: Is Finance involved in writing or concurring with financial recommendations and fiscal impact section of staff reports? Do recommendations adequately explain the long-term impacts of decisions? Does the budget reserves policy provide appropriate flexibility and are you in compliance? Is breaking reserves into various categories appropriate for your agency? Are elected officials and the public aware of reserves? Reserve Category 6/30/2016 Balance % of Expenditures Designated Operating Reserve (50%) $ 15,599, % Excess Operating Reserves 4,694, % Total Operating Reserves 20,293, % Risk Management Special Reserve 1,770, % Employee Leave Liability Special Reserve 649, % City Facilities Special Reserve 634, % Vehicles & Equipment Special Reserve 238, % Infrastructure Special Reserve 4,200, % Excess Special Reserves 52, % Total Special Reserves 7,543, % Total General Fund Reserves $ 27,837, % 33

38 Find it at: GFOA Risk Assessment Tool Evaluates an agency s unique risks Numeric score places an agency into one of four risk categories Minimal minimum reserve level of two months operations Low to moderate Level at or above the minimum based on peer benchmarking Moderate to high Higher level with more detailed analysis of risk exposure High - Highest level with detailed analysis of risk exposure Local conditions may dictate the need for larger reserves 34

39 Polling Question #3 Given your background and experience, where will you want to brush up your skills or enlist help on these budget-related issues? 35

40 Debt Management Policies and Practices Issue: Debt management practices may be inadequate and requirements are always changing Potential problems: Late or unfiled disclosure and arbitrage reports Failure to file material event notices lost investment earnings potential Bond proceeds on hand for years Inadequate recordkeeping for IRS audit purposes Private activity issues 36

41 Debt Management Policies and Practices Questions to ask: Is there a comprehensive, frequently-updated debt management policy and clear procedures for staff to follow? Who prepares disclosure and arbitrage reports and material event notices (or are they being prepared) and are they filed timely? How are bond proceeds and reserve funds invested and how long have bond proceeds been on hand? How long are records of bond proceeds expenditures kept? Is a monitoring program in place to check for new private activity uses of bond-financed facilities? 37

42 Investment Policy and Investment Strategy Issue: Many agencies have out of date investment policies or do not optimally invest funds Potential problems: Unnecessary policy limitations Inconsistency with state law or current practices Inadequate reporting to Council or Board No cash flow modeling / cash shortages High bank or LAIF balances Low interest earnings 38

43 Investment Policy and Investment Strategy Questions to ask: Who is maintaining the investment policy and when was it last updated? Are investment reports provided to the Council or Board? Is cash flow modeling currently utilized to maximize invested funds? Do cash shortages exist that require external borrowing? Are bank or LAIF balances sized appropriately? Does staff have the expertise and time to manage the portfolio? 39

44 Focusing on Internal Issues While not typically visible to elected officials or the public, sound internal policies and practices are still extremely important Key areas to examine Cash handling, petty cash, and register access General process workflow and approval issues Procurement and accounts payable Position control, salaries, and benefits 40

45 Cash Handling, Petty Cash, and Register Access Issue: Sufficient protections may not be in place to ensure that cash is safeguarded from theft Potential problems: Cash in the bank is not reconciled monthly with adequate review Too many employees have access to cash registers or petty cash Collected cash is not reconciled daily with payments received Proper documentation is not obtained for petty cash utilization Too much cash is stored on-site before transport to the bank and/or staff are taking large amounts of cash to the bank 41

46 Cash Handling, Petty Cash, and Register Access Questions to ask: Is cash reconciled monthly with secondary review? Are cash transactions reconciled daily with payments received? Is access to cash limited to only critical employees? Are petty cash transactions properly documented? Is cash sent to the bank daily or often enough to minimize large amounts of cash kept on-site? 42

47 General Process Workflow and Approval Issues Issue: Inadequate controls to avoid processrelated problems can result in fraud and theft Potential problems: Inconsistent procedures Lack of emphasis on importance / consequences Insufficient verification of signatures Lack of document control Violation of policy limitations related to amounts or transaction types 43

48 General Process Workflow and Approval Issues Questions to ask: Is there well-documented a framework in place with different levels of approval? How frequently are signature lists updated and/or reviewed? Are there previous audit comments? Are substitute approvals acceptable? Can a single employee have custody of documents throughout the process or gain access after routing has started? Are department heads aware of what is going on in their department? Do employees understand the importance of these issues? 44

49 Procurement and Accounts Payable Issue: Failure to provide adequate oversight to the procurement process can result in violations of the law or internal policies and procedures Potential problems: Payment of invoices without a purchase order Issues with adequacy of competitive selection Splitting of purchases / unnecessarily low bid limits Inadequate tracking of change orders Exceeding Council or Board-authorized contract or change order limitations 45

50 Procurement and Accounts Payable Questions to ask: Are procurement policies out of date? What do the departments think? Is bid splitting happening and/or are bid limits too low? Is a process in place to ensure that departments are really trying to obtain competitive quotes? Are purchase orders always required other than for specific types of purchases? Are change orders tracked by Finance to ensure accurate encumbrances? Is a process in place to monitor spending limitations imposed by the Council or Board? 46

51 Polling Question #4 Given your background and experience, where will you want to brush up your skills or enlist help on these debt and cash management issues? 47

52 Position Control, Salaries, and Benefits Issue: Information provided by the HR Department is not sufficient or timely and impacts payroll operations Potential problems: Employees are paid after they have separated or are placed on leave Merit increases, cost of living adjustments, or benefits adjustments are not processed timely Employees are hired for which there are no funds budgeted Retired annuitants or temporary employees are not properly tracked or reported to CalPERS Employee pay is inconsistent with approved schedules and/or is not periodically reviewed 48

53 Position Control, Salaries, and Benefits Questions to ask: Is Finance part of the employee separation or leave workflow? Do current procedures ensure that changes in salaries and benefits are processed timely by payroll? Is available budget checked prior to initiating recruitments? Are retired annuitants and temporary employees tracked to ensure compliance with CalPERS regulations? Are any employees paid more or less than per authorized salary schedules? Are additional pay amounts reviewed periodically and checked by managers with knowledge of the positions? 49

54 Some areas to focus on include: Thorough review of account balances and financial statements for outdated or forgotten information Lack of emphasis on the importance of the audit and periodic internal or special audits Fixed assets tracking and disposal Collections practices Other Key Areas Overtime utilization and timecard approvals User fee updates and impact fee updates and required reporting We want to hear from you. What else? 50

55 Polling Question #5 For which of these other key areas would you like to learn more about issues, problems, and questions to ask? 51

56 Other Helpful Resources Visit the GFOA and CSMFO resource areas: Attend CSMFO s Power of Fiscal Policies & Long Term Financial Planning course: Connect with a CSMFO Coach to provide guidance: Find agencies with document / policy / forecast formats that you like and ask for their original Excel and Word documents: A good place to start is larger California cities GFOA also has some direct links to recommended documents from around the country 52

57 Scott Catlett Finance Director / City Treasurer City of Yorba Linda (714) scatlett@yorba-linda.org Brent Mason Director of Finance City of San Bernardino (909) mason_br@sbcity.org 53

58 Post-Webinar Discussion Questions a. Do we know how our cash and other valuables are handled (approvals, etc.)? b. Are the critical fiscal policies in place and are they followed? c. What do we need to do to be sure that our agency is on a solid foundation? 54

59 Contacts for today s webinar Presenters: Grace Leung, Asst. City Manager, Irvine, CA GLeung@cityofirvine.org Scott Catlett, Finance Director and Treasurer, Yorba Linda, CA SCatlett@yorba-linda.org Brent Mason, Finance Director, San Bernardino, CA Mason_BR@sbcity.org Moderator: * Don Maruska, Director, CSMFO Coaching Program CSMFO@donmaruska.com 55

60 Polling Question #6 How was the webinar of value for you? 56

61 Resources and Feedback A digital audio recording of the session and an Agenda packet with PDF of the PPT with polling results and other materials will become available in ~ 24 hours at the Agendas & Archives tab of Other coaching resources, including volunteer one-to-one coaches are available at Please complete the follow up survey, including suggested topics for future webinars. 57

62 Upcoming Events at CSMFO Conference Speed Coaching 2:30-3:45 p.m., Wed., Feb. 8, CSMFO Conf., Sacramento Pre-register Interview Quick Takes minute segments 2:15-5:15 p.m., Wed., Feb. 8, CSMFO Conf., Sacramento See notice coming via list for advance registration. 58

63 Polling Results from Essential Steps in a New Finance Director Role webinar January 11, locations; 174 estimated participants in live audience